It's reasonable to say that Warner's statements that the consumer choose BD had nothing to do with their ultimate decision. No one had really chosen anything with less than 1% of all home video sales being HD sales in 2007.
Paramount said that HD-DVD had a better and more finalized spec, and they thought HD-DVD was superior (mandatory picture in picture, ethernet port, etc -- only BD advantage was space). Warner said that BD was chosen by the consumer. They're both BS to one extent or another. They're just PR reasons the companies listed for making the switch. Do you think "we were paid a lot of money to move over" would go over as well?
Warner was in a good spot, but if I were them I wouldn't have sold to either format for $500 million. I'd have insisted that all of my releases would be royalty free for the life of the format in addition to a cash payout. This would be worth billions for a studio as large as Warner. And, who knows, maybe that did happen.
I wonder how much of this money came from Toshiba indirectly when they purchased Sony's Cell fab plant.
Of course there was a payoff! Do you really believe Warner would hold the promise of tipping the format war and give it away for free? Do you really believe that the HD-DVD consortium wouldn't offer Warner hundreds of millions to make their format the next HD format? Warner kept itself in an awesome position by staying platform agnostic, and because it was the final studio and the only way to end the format war within the next couple of years, it had a very valuable position.
If Warner didn't leverage that position for a lot of money they'd be more than foolish. There's nothing wrong with the payout, in my eyes, but it would be naive to say you didn't believe there had been one.
We don't know the full terms, but I wouldn't consider it desperate. I'd consider it an expensive up-front investment on something that possibly holds the potential to multiply that investment by a factor of 100. Let's say Sony sits back and doesn't offer Warner and Fox enough to be BD exclusive: Toshiba would have offered them a similar figure and HD-DVD would have won the format war probably late this year or next. The wildcard is what the potential windfall might be.
If BD can oust DVD quickly, Sony would be in a position to make many billions over the life of BD. If BD takes years to oust DVD, it would be in a much weaker position. The biggest issues here are:
(1) Consumers don't know why they need to upgrade to BD. They assume DVD is high def. They connect their fancy HD TV sets with composite and stretch aspect ratios.
(2) The cost of BD, by design, will be significantly higher than DVD. This will stop a lot of people from adopting it, especially the unwashed masses that don't know the difference.
(3) BD doesn't have nearly as many advantages over DVD as DVD had over VHS. DVD promised surround sound, vastly superior images and colors (debatable for DVD vs BD), a fancy new disc-based format, and logevity without quality degredation. BD promises better surround sound -- if you have the equipment. Better images and colors, but not to the extent that DVD had over VHS, and higher costs.
People won't adopt any HD format en masse anytime soon. I've been saying this before the BD trump card, and I will continue to say it for the next couple of years. When BD players are cheap -- and more importantly -- BD disc prices approach DVD prices, we'll have the potential for serious adoption.
